Apr 11, 2012, 08.13 AM | Source: CNBC-TV18

Refund is unconstitutional, says IGL chairman

Indraprastha Gas has not yet decided on pricing petroleum products it sells even after the Petroleum and Natural Gas Regulatory Board directed Indraprastha Gas Ltd asked the company to cut tariffs.

M Ravindran, CMD, IGL
Indraprastha Gas has not yet decided on pricing petroleum products it sells even after the Petroleum and Natural Gas Regulatory Board ( PNGRB)directed Indraprastha Gas Ltd asked the company to cut tariffs.

M Ravindran, IGL’s chairman and managing director told CNBC-TV18 that PNGRB’s order is not pragmatic. “We will take a call on prices only after finalising legal action,” says Ravindran.

He further said that refund is against provisions of of PNGRB Act.

However, according to sources, IGL is contemplating to file a writ petition in the Delhi High Court against the natural gas regulator.

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The regulator has also asked that its order be implemented immediately. The new tariff is effective retrospectively from 1 April 2008 and as per rough estimates, the excess tariff charged could be around Rs 1,600 crore.

Here is an edited transcript of Ravindran's  interivew to CNBC-TV18.

Q: Take us through your initial reaction on what has come through with regards to the PNGRB? How exactly is IGL going to react to this? What is the litigation? What are the legal steps you might undertake to counteract this?

A: The entire aspect of this PNGRB order is yet to be received physically by us as it has just been web posted. We will go through the entire aspect of the order in detail once we get it in black and white from our end. The only regulatory aspect which has come over here is that it is an order which has been passed from 2008 onwards which we feel is practically not possible right now at this point of time as we have given all our data to the regulator in 2008-2009 itself.

So passing an order in 2012 and by telling us to get a retrospective effect is not a practical thing and is not correct is what we feel at this point of time. However, we are going into the merit and legal aspect of the entire thing. We will be communicating to the entire team here by 4 pm which is what is it that we are going to take action for and then communicate how we will take it forward. The entire thing has to be seen in a legal and quasijudicial form.

Q: Is there a possibility that you might hike your marketing margins at least in the near-term to protect yourself a tad bit?

A: On the pricing front we have not finalised anything. The status quo position remains as it is. We will not take a call until we finalise on our legal course.

Q: How much do you think would be the excess charges according to you on retrospective basis?

A: For all these things, we will revert back to the entire team. We are communicating the entire message to the entire media team which is when you will be informed as well.

Q: You must have done a rough cut analysis – it has been close to 20 hours since the order got passed. What is your initial assessment of how much of a financial impact the order will have in its current form?

A: The order does not make any sense because there are various changes and assumptions which the regulator has assumed. There is no point in discussing these numbers because the assumptions vary which is not in confirmative with what we have assumed.

Q: In your assessment what should have been the scenario?

A: The scenario should have been that when we gave it in 2009 they should have finalised it within four-six months and then they should have impacted the tariffs immediately. But since they have taken three years at their own end to decide and then they say in June 2011 they have decided everything and are finally passing the order in April 2012 is something totally not acceptable to IGL.

Q: So there is no conformity on whether you will be hiking your marketing margins?

A: No. Nothing. We are keeping the pricing status quo as it is.

Also Read:

Indraprastha Gas to contest tariff cut directive in court


IGL stock price

On November 26, 2015, Indraprastha Gas closed at Rs 480.90, up Rs 0.85, or 0.18 percent. The 52-week high of the share was Rs 523.00 and the 52-week low was Rs 376.00.

The company's trailing 12-month (TTM) EPS was at Rs 29.11 per share as per the quarter ended September 2015. The stock's price-to-earnings (P/E) ratio was 16.52. The latest book value of the company is Rs 149.87 per share. At current value, the price-to-book value of the company is 3.21.

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